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Corporate Effective Tax Rates for Research and Policy

Author

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  • Petr Jansky

    (Institute of Economic Studies, Faculty of Social Sciences, Charles University, Opletalova 26, 110 00, Prague, Czech Republic)

Abstract

How much companies pay in corporate income taxes is often better captured by effective tax rates (ETRs) rather than by statutory ones. Economists further distinguish between those modelled using the law - forward-looking ETRs - and those estimated from actual data on companies´ profits and taxes - backward-looking ETRs. Moving beyond this binary distinction, I present a spectrum where backward-looking ETRs are further broken down by the type of data used to estimate them and where all ETRs may be located along with applicable statutory rates. Within that spectrum, I focus on backward-looking ETRs and, specifically, on those estimated using companies´ balance sheet databases. Based on my review of recent findings, I argue that backward-looking ETRs - of multinational corporations in particular - have become more frequently estimated thanks to advances in data availability while also becoming more relevant as a result of ongoing global corporate tax reform debates. Ultimately, I argue that the full range of various ETRs can play a useful role in both research and policy.

Suggested Citation

  • Petr Jansky, 2020. "Corporate Effective Tax Rates for Research and Policy," Working Papers IES 2020/41, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Oct 2020.
    • Handle: RePEc:fau:wpaper:wp2020_41
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    File URL: https://ies.fsv.cuni.cz/en/veda-vyzkum/working-papers/6314
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    Cited by:

    1. Sarah Godar & Giulia Aliprandi & Tommaso Faccio & Petr Janský & Katia Toledo Ruiz, 2024. "The long way to tax transparency: lessons from the early publishers of country-by-country reports," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 31(2), pages 593-634, April.
    2. Jules Ducept & Sarah Godar, 2025. "Declining Effective Tax Rates of Multinationals: The Hidden Role of Tax Base Reforms," Working Papers 030, EU Tax Observatory.
    3. Javier Garcia-Bernardo & Petr Janský & Thomas Tørsløv, 2021. "Correction to: Multinational corporations and tax havens: evidence from country‑by‑country reporting," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 28(6), pages 1562-1562, December.
    4. Rida Nazeer & Syed Shafqat Mukarram & Faiza Saleem, 2025. "Taxation and Financial Leverage in Emerging Markets: Insights from Pakistan’s Karachi Stock Exchange-100," Journal of Tax Reform, Graduate School of Economics and Management, Ural Federal University, vol. 11(1), pages 57-73.

    More about this item

    Keywords

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    JEL classification:

    • C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Microeconomic Data; Data Access
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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